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Education Expenses

Education Expenses for Owners and Employees

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Education Expenses

What You May Deduct
You may deduct the cost of "ordinary and necessary" expenses paid for employee education and training.

Business owners can deduct costs for their own education, subject to certain limitations. To be deductible, you must be able to show that the education:

  • "Maintains or improves skills required in your present work," or
  • It is required by law or regulations for maintaining a license to practice, status, or job. For example, professionals can deduct costs for continuing education.

Education expenses are not deductible if:

  • The education is needed to meet the minimum educational requirements of your present trade or business, or
  • Is part of a program of study that will qualify you for a new trade or business.

For more information on qualifying educational expenses, see IRS Publication 970 (PDF).

Deductible educational expenses include books, tuition, travel costs to and from school.

What You May Not Deduct
You may not deduct costs for education expenses "to meet the minimum requirements of your present trade or business." For example, you cannot deduct the cost of obtaining a license to practice if you don't already hold such a license.

Where to Show these Expenses

  • For sole proprietors and single-member LLCs, show these expenses in the "Expenses" section of Schedule C
  • For partnerships and multiple-member LLCs, show these expenses in the "Deductions" section of Form 1065
  • For corporations, show these expenses in the "Deductions" section of Form 1120.

Disclaimer
This article presents general information; I am not a tax attorney or tax preparation specialist. Refer to IRS publications and refer questions to your tax consultant.

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